Technical Analysis of FTSE ST REIT Index (FSTAS351020)

FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) decreased from 649.94 to 642.87 (-1.09%) compared to last month’s update. Singapore REITs index is currently trading near the support level of a wedge pattern.

• Short-term direction: Sideways
• Medium-term direction: Sideways
• Long-term direction: Sideways
• Immediate Support: Blue Support Line (Wedge)
• Immediate Resistance: Red resistance line (Wedge)

FTSE REIT Index Chart (2 years)

Previous chart on FTSE ST REIT index can be found in the last post: Singapore REIT Fundamental Comparison Table on November 10th, 2024.

Fundamental Analysis of 38 Singapore REITs

The following is the compilation of 38 Singapore REITs with colour-coding of the Distribution Yield, Gearing Ratio and Price to NAV Ratio.

• The Financial Ratios are based on past data and these are lagging indicators.
• All REITs have the latest Q3 2024 values.
• I have introduced weighted average (weighted by market cap) to the financial ratios, in addition to the existing simple average ratios. This is another perspective where smaller market cap REITs do not disproportionately affect the average ratios.

Data from REITsavvy Screener. https://screener.reitsavvy.com/

What does each Column mean?

• FY DPU: If Green, FY DPU for the recent 4 Quarters is higher than that of the preceding 4 Quarters. If Lower, it is Red.

• Yield (ttm): Yield, calculated by DPU (trailing twelve months) and Current Price as of December 6th, 2024.

• Gearing (%): Leverage Ratio.

• Price/NAV: Price to Book Value. Formula: Current Price over Net Asset Value per Unit.

• Yield Spread (%): REIT yield (ttm) reference to Gov Bond Yields. REITs are referenced to SG Gov Bond Yield.

As of May 2024, all REITs’ Yield Spread will be referenced to SG Gov Bond Yields, regardless of trading currency.

Price/NAV Ratios Overview

• Price/NAV increased to 0.89 (Weighted Average: 0.89)
  • Increased from 0.87 in November 2024.
  • Singapore Overall REIT sector is slightly undervalued

• Most overvalued REITs (based on Price/NAV)
  

  Keppel DC REIT	1.61
  ParkwayLife REIT	1.56
  Mapletree Industrial Tr	1.23
  Capitaland Ascendas REIT	1.18
  AIMS APAC REIT	0.97
  Mapletree Logistics Tr	0.96

  EC World REIT is currently suspended, however at current Price and NAV/Unit values it has a value of 4.67 (N.M)

• Most undervalued REITs (based on Price/NAV)
  

  Manulife US REIT	0.31
  Acrophyte Hospitality Trust	0.31
  Lippo Malls Indonesia Retail Trust	0.32
  Prime US REIT	0.32
  Keppel Pacific Oak US REIT	0.33
  OUE REIT	0.43

Distribution Yields Overview

• TTM Distribution Yield decreased to 6.08%. (Weighted Average decreased to 6.19%)    
  • Decreased from 6.50% in November 2024. (Weighted Average was 6.25%)
  • 16 of 38 Singapore REITs have ttm distribution yields of above 7%.

• Highest Distribution Yield REITs (ttm)
  

  Acrophyte Hospitality Trust	12.45
  IREIT Global	11.46
  First REIT	9.23
  Elite UK REIT	9.10
  United Hampshire REIT	9.02
  Cromwell European REIT	8.90

  Reminder that these yield numbers are based on current prices. 

  • Some REITs opted for semi-annual reporting and thus no quarterly DPU was announced.
  • A High Yield should not be the sole ratio to look for when choosing a REIT to invest in.

• Yield Spread tightened to 3.38%. (Weighted Average remained similar at 4.01%)     
  • Tightened from 3.69% in November 2024. (Weighted Average was 4.02%)
  • From May 2024 onwards, all my yield spread measurements are now in relation to SG Gov Bond Yields, no longer a mix with US Gov Bond Yields.

Gearing Ratios Overview

• Gearing Ratio decreased to 39.60%. (Weighted Average: 38.76%)
  • Decreased from 39.74% in November 2024. (Weighted Average: 38.69%)  
  • Gearing Ratios are updated quarterly.
  • S-REITs Gearing Ratio has been on a steady uptrend. It was 35.55% in Q4 2019.

• Highest Gearing Ratio REITs
  

  Manulife US REIT	58.2
  EC World REIT	56.1
  Prime US REIT	47.8
  Elite UK REIT	45.1
  Lippo Malls Indonesia Retail Trust	45.0
  Acrophyte Hospitality Trust	43.2

  MUST and EC World REIT’s gearing ratio has exceeded MAS’s gearing limit of 50%. However, the aggregate leverage limit is not considered to be breached if exceeding the limit is due to circumstances beyond the control of the REIT Manager.

Market Capitalisation Overview

• Total Singapore REIT Market Capitalisation decreased by 0.50% to S$86.34 Billion.
  • Decreased from S$86.77 Billion in November 2024.

• Biggest Market Capitalisation REITs (S$m):
  

  Capitaland Integrated Commercial Trust	13,063.96
  Capitaland Ascendas REIT	11,388.23
  Mapletree Logistics Tr	6,458.88
  Mapletree Pan Asia Commercial Trust	6,418.42
  Mapletree Industrial Tr	6,000.84
  Frasers Centrepoint Trust	3,889.45

• Smallest Market Capitalisation REITs (S$m):
  

  Acrophyte Hospitality Trust	124.70
  Lippo Malls Indonesia Retail Trust	138.55
  Elite UK REIT	178.23
  Manulife US REIT	190.84
  BHG Retail REIT	213.04
  EC World REIT	226.76

Disclaimer: The above table is best used for “screening and shortlisting only”. It is NOT for investing (Buy / Sell) decision. If you want to know more about investing in REITs, scroll down for more information on the REITs courses.

Top 20 Best/Worst Performers of November 2024

Source: https://screener.reitsavvy.com/

SG 10 Year Government Bond Yield

• SG 10 Year: 2.70% (decreased from 2.82%)

Summary

Singapore REITs has temporarily paused at current level (near the support based on chart pattern). At the same time, US 10 years risk free rate has broken out from an uptrend channel and showing sign of trend reversal.

US 10 Year Risk Free Rate

Fundamentally, the S-REIT sector is trading at a 11% discount to its fair value, with an average trailing twelve-month (TTM) yield of 6.08%. 

According to the current Fed Fund Rate projections from the CME Group, the market expect another 25 basis point cut by end 2024, with a total reduction of 100 basis points cut from the peak of the interest rate cycle. The cut in interest rate will help to boost the DPU of the REITs which have shorter debt maturity profile and higher percentage of floating rate. However, the impact will only be reflected in the financial statement of the next 1 to 2 quarter. The current weakness of the S-REIT sector will continue to be shadowed by the US 10 Year Risk Free rate which have has very strong inversed correlation with the REIT index.

Kenny Loh is a distinguished Wealth Advisory Director with a specialization in holistic investment planning and estate management. He excels in assisting clients to grow their investment capital and establish passive income streams for retirement. Kenny also facilitates tax-efficient portfolio transfers to beneficiaries, ensuring tax-efficient capital appreciation through risk mitigation approaches and optimized wealth transfer through strategic asset structuring.

In addition to his advisory role, Kenny is an esteemed SGX Academy trainer specializing in S-REIT investing and regularly shares his insights on MoneyFM 89.3. He holds the titles of Certified Estate & Legacy Planning Consultant and CERTIFIED FINANCIAL PLANNER (CFP).

With over a decade of experience in holistic estate planning, Kenny employs a unique “3-in-1 Will, LPA, and Standby Trust” solution to address clients’ social considerations, legal obligations, emotional needs, and family harmony. He holds double master’s degrees in Business Administration and Electrical Engineering, and is an Associate Estate Planning Practitioner (AEPP), a designation jointly awarded by The Society of Will Writers & Estate Planning Practitioners (SWWEPP) of the United Kingdom and Estate Planning Practitioner Limited (EPPL), the accreditation body for Asia.

 You can join his Telegram channel #REITirement – SREIT Singapore REIT Market Update and Retirement related news. https://t.me/REITirement